...SAN FRANCISCO Jan. 10 2012 /- Access to capital a burd...(Logo: a href http://photos.prnewswire.com/prnh/20100917/NY66894LOGO...Findings of the CEO Survey reflect issues being discussed throughout t... As the center of biomedical innovation in the U.S. California's biom...

SAN FRANCISCO, Jan. 10, 2012 /PRNewswire/ -- Access to capital, a burdensome and uncertain regulatory environment and lack of innovation and productivity in research and development are the biggest threats to the biomedical industry's growth over the next five years, according to biomedical company CEOs surveyed by CHI-California Healthcare Institute, BayBio and PwC US. The CEO Survey found:

Nearly three quarters (74 percent) of biomedical industry CEOs surveyed said their companies have had to delay a research or development project in the past year.

Lack of funding was the top reason for project delays cited by private company CEOs, and accounted for more than one-third (40 percent) of delays by all public and private companies in the survey.

Eight in 10 CEOs surveyed agreed or strongly agreed that the current FDA regulatory approval process has slowed the growth of their organization.

Findings of the CEO Survey reflect issues being discussed throughout the biomedical industry by executives gathering in California this week, and provide an early glimpse into the 2012 California Biomedical Industry Report, due in February. The report, published annually by CHI, BayBio and PwC, provides a snapshot of the biomedical industry in California, the largest biomedical cluster in the world and the source of the greatest number of products in clinical development.

"As the center of biomedical innovation in the U.S., California's biomedical industry is a national treasure," said Gail Maderis, president and CEO of BayBio. "But the pace of R&D productivity and its global leadership position hang on the availability of capital to fund future innovation and a regulatory framework that is based on consistency and innovative technologies."

The CEO Survey found that biomedical companies in California have been resourceful over the past year in seeking diverse funding sources, divided almost evenly among government grants, angel investors, venture capital and licensing agreements and partnerships.

"Biomedical companies have long relied on government grants and venture capital to finance innovation, but funding sources are shifting and companies will need to adapt to a new reality," said Tracy Lefteroff, national life sciences partner, PwC US. "While venture capitalists and angel investors will continue to be an important source of funding, it has become increasingly difficult for biomedical companies to gain access to them. Alternative sources of funding are emerging, which highlight shifting opportunities and dynamics in life sciences innovation."

Forty-four percent of biomedical CEOs surveyed said they will look to licensing agreements and corporate partnerships as a source of finance in the next 12 months, double the number of CEOs who last year said their companies are using this avenue for finance.

Corporate venture funding, the investment of corporate funds into external endeavors, is expected to become a much more crucial source of funding to the industry, with 30 percent of CEOs surveyed saying they will tap corporate venture capital as a finance source in the next 12 months, versus only 10 percent who did so in the past 12 months.

Though still only a small contributor to the finance equation, disease foundations/non-governmental organizations are growing as a funding source for 11 percent of CEOs who plan to use these funds in the next 12 months, versus only 4 percent who did last year.

Access to capital is seen by CEOs as the most influential state policy issue to keep biomedical research, innovation and investment in California. Nearly three-quarters (72 percent) of CEOs said that access to capital is extremely important, followed by (in order of importance) tax incentives for innovation (60 percent), corporate taxation (51 percent), workforce preparedness (47 percent) and duplicative regulation among various state and federal agencies (37 percent).

Regulatory Environment will Determine R&D Productivity

According to CEOs surveyed, FDA and regulation are the key issues affecting research and development. Eighty-one percent of CEOs also said that coverage and reimbursement issues are extremely important to the industry's ability to advance biomedical research, innovation and investment in California.

In addition, 80 percent of CEOs surveyed do not believe that U.S. FDA has the best regulatory approval process in the world, and three-quarters believe that within five years, another country could conceivably recreate the ecosystem that has made the U.S. the leading biomedical region in the world.

"Sound public policy and managerial and operational improvements at FDA, along with responsible congressional oversight, will encourage biomedical innovation and, ultimately, job growth here in California," said David L. Gollaher, Ph.D., president and CEO of the California Healthcare Institute. "Working collaboratively with other stakeholders, Congress, FDA and the biomedical industry can maintain the high standards of safety and effectiveness that address patients' need, while improving our ability to attract investment and grow in 2012 and beyond."

Methodology

CHI and BayBio worked with PwC to collect and administer data for the 2012 CHI, BayBio, PwC California Biomedical Industry Survey. The survey was conducted in November 2011 and targeted approximately 100 companies that conduct business in California in the areas of pharmaceuticals, biotechnology, medical devices, diagnostics or medical equipment.

About the California Healthcare Institute

CHI represents more than 275 leading biotechnology, medical device, diagnostics, and pharmaceutical companies, and public and private academic biomedical research organizations. CHI's mission is to advance responsible public policies that foster medical innovation and promote scientific discovery. CHI's website is www.chi.org. Follow us on Twitter @calhealthcare, Facebook, LinkedIn and YouTube.

About BayBio

BayBio is Northern California's life science association, supporting the regional bioscience community through advocacy, enterprise support, and the enhancement of research collaboration. Its members include organizations engaged in, or supportive of, research, development and commercialization of life science technologies. Online at www.baybio.org. Follow BayBio on Twitter at @baybio.

About PwC's Pharmaceutical, Medical Device and Life Sciences Industry Group

PwC's Pharmaceutical, Medical Device and Life Sciences industry group (www.pwc.com/us/pharma and www.pwc.com/us/medtech) is dedicated to delivering effective solutions to the complex strategic, operational and financial challenges facing pharmaceutical, biotechnology and medical device companies. We provide industry-focused assurance, tax and advisory services to build public trust and enhance value for our clients and their stakeholders. Follow PwC Health Industries at http://twitter.com/PwCHealth.

About the PwC Network

PwC firms help organizations and individuals create the value they're looking for. We're a network of firms in 158 countries with close to 169,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.

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